Tuesday, 2 October 2012

LATEST JUDGMENTS OF THE COURTS

LATEST JUDGMENTS OF THE COURTS

     1. M/S NEW HORIZON SUGAR MILLS LTD. VS. GOVT. OF PONDICHERRY - SEP 27 2012

Issue
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, ("SARFAESI Act") - Section 13(2), 13(2)(4), 17, 13(6); Industrial Disputes Act, 1947 - Section 25FF; Banking Regulations Act, 1949 - Section 5(c); Reserve Bank of India Act, 1949 - Section 45-I (f), 58B (5A) or 58G; Companies Act, 1956 - Section 58A

Synopsis
The Bank declared the loan account of the Mill to be a "non-performing asset", because the Appellant Mill defaulted in payment of the loan amount. The Bank issued notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, ("SARFAESI Act") to recover the said amount. The Appellant challenged the said notice by filing Writ Appeal before the Madras High Court which was disposed of and the Appellant Mill was directed to repay the entire loan amount in three installments. Due to default committed by the Appellant Mill in payment of the first installment the Bank proceeded under the provisions of Sub-Sections (2) and (4) of Section 13 of the SARFAESI Act to take possession of the property offered as security and sale of the same by auction. Auction proceedings started which was challenged by several other banks and financial agencies to safeguard and protect their respective claims against the Mill. All the Writ Petitions, including the one filed by the workers/employees of the Appellant Mill, were dismissed. The Appellant Mill filed Writ Petition for an appropriate direction to the Indian Bank to return them the amount which was due from the total sale consideration after deducting the dues of the Bank from the date on which possession of the property in question was taken over and for return of the remaining documents relating to the movable and immovable properties belonging to the Appellant after satisfying the Bank’s charge. The Appellant Mill filed another Writ Petition challenging the validity of G.O.Ms. The main issue to be considered was with regard to the validity of the Pondicherry Protection of Interests of Depositors in Financial Establishments Act, 2004 and G.O.Ms. issued by the Department of Revenue and Disaster Management. Held, clause (1) of Article 254 provided that when there were two laws enacted by the Parliament and the State Legislature in which certain inconsistencies took place, then the law made by the Parliament would persist and the law made by the State Legislature to the extent it was repugnant to the Central law, should be void. Clause (2), however, also provided that in a given situation where a law of a State was in conflict with the law made by Parliament, the law so made by the State Legislature should, if it had received the agreement of the President, prevailed in that State. The Pondicherry Act had received the consent of the President drawing the provisions of Article 254(2) of the Constitution. Although an attempt was made on behalf of the Appellant to state that it was not the Appellant Company which had accepted the deposits, but M/s PNL Nidhi Ltd., which had changed its name five times, such an argument could not prima facie be accepted. It was a case of the Respondents where funds were collected by way of deposits and diverted to create the assets of the Appellant Mill. There was little difference between the provisions of the Tamil Nadu Act and the Pondicherry Act, which was to protect the interests of depositors who stood to lose their investments on account of the diversion of the funds collected by M/s PNL Nidhi Ltd. for the benefit of the Appellant Mill, which was privately owned by Shri V. Kannan and Shri V. Baskaran, who were also Directors of M/s PNL Nidhi Ltd. Cases referred to were: i.) Charan Lal Sahu Vs. Union of India, ii.) S. Pushpa and others Vs. Sivachanmugavelu and others.

Hence, the Appeals were dismissed with costs assessed at Rs.1,00,000/-.


2  2. KAMLESH AMBALAL CONTRACTOR AND ORS. VS. JAKSHIBHAI SAJANBHAI BHARVAD AND ORS. - SEP 26 2012

Issue
Property Law

Synopsis
A suit was filed for the declaration of title on the property. A compromise was arrived at, between parties but not signed by defendants but by the PA holder. Aggrieved by the judgment of the lower appellate court, Plaintiffs opted for an appeal before the High Court and the same was dismissed. Against the said judgment of the High Court, this appeal was made. Held, no effective opportunity was given to Defendants 1 to 9 for properly prosecuting their case. The General Power of Attorney and its alleged cancellation and the various steps taken by the PA holder before and after its cancellation and their legality, the impact of Earnest Agreement and Possession Agreement etc. were all matters to be examined by the trial court. Consent decree passed by the trial court, the judgment of the lower appellate court and the judgment of the High Court were set aside and the matter was remitted to the trial court for fresh consideration in accordance with the law.

The appeal was therefore, disposed of accordingly.
  

    3. AJAY KUMAR PARMAR VS. STATE OF RAJASTHAN - SEP 27 2012

Issue
Indian Penal Code, 1860 - Sections 376, 342; Code of Criminal Procedure, 1973 - Section 161, 164

Synopsis
The Appellant was held for the offences under Sections 376 and 342 of the Indian Penal Code, 1860 passed by the Judicial Magistrate. The Sessions Judge in the Revision Petition had reversed the order of discharge of the Appellant by the said revisional order. The High Court had upheld the judgment and order passed by the Sessions Judge. Hence, this appeal. Held, when an offence was cognizable by the Sessions court, the Magistrate could not investigate into the matter and discharge the accused. It was not allowed for him to do so, even after considering the evidence on record, as he had no jurisdiction to examine the matter at all. His concern was to see what provisions of the Penal statute were mentioned and in case an offence triable by the Sessions Court was mentioned, he was to commit the case to the Sessions Court and do nothing else. Thus, the Magistrate had no business to discharge the appellant. In fact, Section 207-A in the old Cr.P.C., authorized the Magistrate to exercise such a power. However, in the Cr.P.C. 1973, there was no provision similar to the said Section 207-A. He was bound under law, to commit the case to the Sessions Court, where such application for discharge would be considered. The order of discharge was therefore, a nullity, being without jurisdiction. The Magistrate did not give any notice to the complainant before dropping the proceedings and, thus, acted in violation of the mandatory requirement of law. Cases referred to were: i.) State of Orissa v. Debendra Nath Padhi, ii.) State of Orissa v. Debendra Nath Padhi, iii.) S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla & Anr. The Judicial Magistrate, Sheoganj, should had committed the case to the Sessions court as the said application could be entertained only by the Sessions Court. Also, it was not allowed for the court to examine the weight of defense evidence at that stage. 

Thus, the order was insignificant being without jurisdiction. Hence, the appeal was dismissed. The judgment and order of the revisional court, as well as of the High Court was upheld.


          4. UNITECH LIMITED, 2. HOUSING AND URBAN DEVELOPMENT CORPORATION VS. 1. HOUSING AND URBAN DEVELOPMENT CORPORATION, 2. UNITECH LIMITED - SEP 27 2012 (DELHI HIGH COURT)

Issue
Arbitration and Conciliation Act, 1996 - Section 34; Indian Contract Act, 1872 - Sections 23, 55, 73, 28

Synopsis
A contract was entered into between Housing and Urban Development Corporation (''HUDCO'') and Unitech Limited (''Unitech'') for construction of civil works of HUDCO Bazar, New Delhi. A dispute arose between HUDCO and Unitech relating to the said contract. The learned Arbitrator passed an award which was challenged in these petitions under Section 34 of the Arbitration and Conciliation Act, 1996. The learned Arbitrator rejected Unitech's Claim 3 (g) for escalation or compensation. Held, where the said prohibitory clauses were not even noticed by the learned Arbitrator the challenged Award became open to invalidity on the ground that it was contrary to the clauses of the contract. Under Claim No. 3, the learned Arbitrator had held that the two BGs, one for a sum of Rs. 26 lakhs and the second for Rs. 2 lakhs furnished by Unitech towards holding money were refundable. The case of HUDCO alleged that the actual amount encashed under the BGs was Rs. 26.35 lakhs. This was not specifically denied by Unitech in its reply. Consequently, the Award in respect of Claim 3 was held to refer to the actual amount encashed by HUDCO under the two BGs which was refundable to Unitech. The objection by Unitech to rejection of its Claim 3 (g) was without merit. The learned Arbitrator gave powerful reasons why in his view the Amendment 3 to Clause 7 did restrict the total increase payable to only plus or minus 10%. There was no error in the analysis or the reasoning of the learned Arbitrator for rejecting Claim 3 (g). Thus, the impugned Award in respect of Additional Claims 5A, 6A and A7 as well as Additional Claims 3 (a) and 3 (b) were set aside. Under Claim 3 it was clarified that actual encashment amount of the BG or of Rs. 28 lakhs whichever was lesser was to be refunded to Unitech. Cases referred to were: i.) Sayeed Ahmed and Company v. State of Uttar Pradesh, ii.) DSA Engineers (Bombay) v. Housing & Urban Development (HUDCO), iii.) Secretary, Irrigation Department, Govt. of Orissa v. G.C. Roy.
  
Hence, the award of pre-reference and pendente lite interest under Claim 6 was set aside. In all other respects, the impugned Award was upheld.


SOURCE: THINK LEGAL


With Regards
Prakash Verma
E Id: Prkverma@yahoo.com